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Wednesday, April 25, 2012

Above:
Wayne Swan is under political pressure to produce a surplus for May 8th.
But to re-engage with voters Labor needs to do a lot more; delivering truly
meaningful and substantial social programs that appeal both to Labor's working
class and liberal middle class electoral bases.

This needs to be provided for through a progressive tax restructure including reform of superannuation tax concessions, dividend imputation and consideration of further 'super profits' taxes where appropriate.

By Tristan Ewins

As the May 8th 2012 Federal Budget approaches top Labor
policy-makers will be nervous. While there is enormous political pressure to
deliver a surplus only very substantial progressive new initiatives hold the
prospect of re-engaging with Labor's traditional working class and liberal
middle class support bases. 'Treading water' on policy simply will not do at
this point. So many voters are 'disengaged' after years now of systemic smears
and disinformation in the media. Very substantial new programs are the only
chance, now, of breaking through: at the very least saving the Senate, and
leaving behind a reform legacy that Abbott will not be able to uproot.

But what specific programs could Labor embrace in
order to re-engage with voters; perhaps even to win in 2013?

Immediately there are a number of options which spring to mind:

Medicare Dental

Gonski recommendations on education

Further funding to improve the quality and equity of Aged Care; with a
long-term official policy of establishing universal Aged Care Social Insurance

Robust Cost of Living initiatives for disadvantaged and working class
Australians, including pensioners and Newstart recipients

Substantial investment in public housing to assist those low income families
and individuals experiencing housing stress; with the additional benefit of
increasing housing supply, driving down rent costs

Targeted tax-driven cross-subsidies for sectors struggling under the weight
of the 'two speed economy'; to include tourism, education and manufacturing;

Fast rail and other infrastructure projects (eg: infrastructure for emerging
suburbs) expedited along the East Coast, with the additional benefit of stimulus
in states which are economically struggling.

Such infrastructure initiatives could be financed via the issuing of
government bonds, which could spread debt repayments over decades, with
competitive annual repayment rates.

Development of infrastructure in new suburbs is also crucial on practical,
environmental and equity grounds: and could create jobs along the economically
languishing South-East Coast. Urban design, including public transport,
parklands and other social facilities are crucial for the quality of lives of
those young families who have been driven by the Howard housing bubble and
population growth onto the 'urban fringe'.

And while Cost-of-Living subsidies should aim to deliver a minimum of an
additional 1 per cent of Male Average Weekly Earnings (approximately $600/year
for individual adults) to assist mainstream working class and disadvantaged
families with energy, water, mortgages and rent, this author does not have
access to modelling to determine the cost.

Yet 'Cost of Living' is THE issue 'out there' with Australian families,
including those working class and disadvantaged families it is Labor's duty to
protect and assist. A big initiative, here: as significant or more significant
than already suggested – could be THE crucial factor in re-engaging with
Australian voters.

Labor also stands to gain, here, by linking Carbon Tax relief with broader
Cost-of-Living Relief. In such a way Labor needs to develop a package in which
all disadvantaged and mainstream working class Australians are significantly
better off. By linking these issues Labor has a chance of changing public
perceptions of the Carbon Tax, while addressing genuine Cost of Living stresses
for those in need.

And tax cuts would be quickly forgotten, so Cost of Living Relief will be
better addressed through a dedicated supplement, to be paid twice-yearly.

Public construction of new energy and water infrastructure could also have
savings flowing on to consumers because of the lower cost of public
borrowing.

Nonetheless, despite our lack of access to modelling in some areas it can be
stated that were the government to reform taxation so as to bring in around an
additional 1.5 per cent of GDP in taxation (approximately $22
billion out of a $1.5 trillion economy), this would provide substantial
scope for the social welfare and industry assistance packages hinted at here,
while also providing for the politically-desirable surplus.

Potential fund-raising mechanisms could include a move to either 75% or 50%
Dividend Imputation (saving between $5 billion and $10 billion/year);
eliminating superannuation concessions for the wealthy (saving approximately $10
billion/year); restructuring of income tax, reversion to the original Resource
Super Profits Tax template, consideration of other 'super profits' taxes where appropriate, and reneging on projected Company Tax cuts.

There is even the prospect of emulating Abbott in terms ofa 1%
increase in Company Tax for large enterprises, ploughing the
proceeds into Aged Care. Given his own position on Paid Parental Leave and his
eagerness to appeal to aged Australia Abbott would be hard-pressed to oppose
such an initiative. It is worth noting that Company Tax in Australia is 30% as
compared with 35% in
some areas of the United States – so there is 'room to move'.

For now, though, it is also worth observing those initiatives for which we do
have costings.

Detractors have attempted to conceal their own vested interests with calls of
'class warfare', but the reality is that 'class warfare' has been waged not
against the wealthy, but against poor and mainstream working class Australia
with the neglect of public education and health care, and increasing dependence
on levies for essential school infrastructure which are 'voluntary' in name
only. The appeal of Gonski is in its emphasis on all students, including those
most struggling – with a further emphasis on improving state school funding, but
without withdrawing existing funding from the private sector. Implementation of
Gonski would mean improved
infrastructure, smaller classes, more teachers and more subject choice for all
schools.

The Federal Government's standing Aged Care policy provides a real funding
boost of only $577 million over 5 years.

Much more is needed,yet nonetheless by shifting its
priorities and implementing means tests an improvement in service will be
experienced by many.

While $1.2 billion has been devoted to providing better salaries and
conditions with the aim of retaining aged care staff, user-pays mechanisms will
not include any forced sale of the family home. User pays
charges will apply for many – both for residential and at-home care. But full
pensioners will pay no fees.

There will be 40,000 new home care places (Up to 100,000), relieving the
impact upon the Aged Care budget of expensive residential care, while providing
many aged Australians with the preferred option of staying at home. Further
initiatives include $269.4 m for dementia, $1 billion for Carers' Respite (over
several years) and the removal of the low care/high care distinction - which in
the past saw aged Australians diverted into high intensity care facilities
prematurely in order to save money. The 'My Aged Care website' is another good
initiative, and the government has wisely avoided a 'free market in Aged Care'.
Many amongst the aged are vulnerable and on their own enjoy little consumer
choice or market power. ('The Age', 21/4/2012)

Yet again the initiatives go nowhere near far enough.

The Combined Pensioners and Superannuant's Association New South Wales (CPSA
– NSW) has long argued for a Aged Care 'social insurance' model. While CPSA NSW
is encouraged by the government's emphasis on at-home care, however, those most
in need do not always have the choice. Billions in new funding are necessary to
improve the quality of residential care, and to give the aged the choice
of high quality low-intensity care in a social environment. (eg:
hostels) Staff to resident and nurse to resident ratios are also crucial that
those needing high intensity care.

And even for those remaining at home more programs are necessary to keep aged
Australians socially engaged, and happy.

The problem with Aged Care is that for many it remains a 'hidden issue'. Aged
Australians are suffering – for lack of care; because of poverty; because of
social disengagement; and because of the dehumanisation and loss of individual
identity that often goes with high-care accomodation.

As an absolute minimum Labor needs to devote an additional $1 billion for
Aged Care in the financial year 2012-13; and announce a progressively-structured
Aged Care Social Insurance Scheme over the long term – similar to the agreed
'National Disability Insurance Scheme' (NDIS). (covering care, but not pension
entitlements) Specifially this author challenges Government Minister Bill
Shorten to champion this cause – no less worthy as it is – as he championed the
cause of disability insurance.

'The Surplus'

There are sound political arguments for Labor's
pursuit of a surplus in the year 2012-13. The level of economic debate in
Australia is for the most part quite low. The perspective on the Federal Budget
is akin to peoples' ideas on managing a family budget. Hence apparently 'The
books must be balanced'. But failure to produce a surplus will result in
opportunist media-grabs by the Opposition – which irresponsibly maintains
popular mythologies on economic management in order to hold on to political
advantage re: perceived competency.

Deeper arguments and realities do not always 'sink in'. Media speculation
about the political imperative of a surplus is usually shallow and uncritical.
Many voters do not seem to comprehend that investment in infrastructure can
increase capacity, improving quality of life and increasing growth over the long
term. And there are those who do not seem to see how stimulus is still warranted
in many state economies as a consequence of the high dollar, and with falling
confidence alongside the decline of tourism, education and manufacturing. Nor
how lack of transport infrastructure in developing suburbs is a drag upon the
broader economy – making investment there not only sustainable, but of positive
benefit.

Were the revenue proposals in this article adopted, alongside other measures
suggested by Irving such as increased taxation of foreign profits in mining,
that could still leave $15 billion for social programs, while the surplus was
achieved.

But regardless of the perceived political imperative of a surplus for 2012-13
Labor still needs truly substantial policy initiatives if it is to re-engage
with voters who have 'switched off' or 'turned away' after almost two years of
sustained media onslaught. This can only be achieved with a commitment of
resources which is truly substantial and appreciable in the 'big picture' of an
economy valued at over $1.5 trillion.

Yet if Labor does produce such initiatives it might also manage to rally its
own base, as well as the sympathetic social movements which could provide for
social base for a real fight-back; and perhaps even a Labor victory in 2013.

THE RED FLAG IS STILL FLYING HERE

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About Me

Tristan's areas of expertise include Australian and world politics, social theory, education, history, and computer gaming for PC. He considers himself a liberal, and also a socialist, but has also referred to himself as a left social democrat. He says such - conscious that there was once a time when 'social democracy' and 'socialism' were synonymous. Furthermore, Tristan is a long-time member of the Australian Labor Party - specifically its Socialist Left wing. He is also involved in the Australian Fabian Society. Tristan has written for many publications - including a stint freelancing for 'The Canberra Times': the daily broadsheet of the Australian Capital. Tristan's Personal Homepage is here: http://sites.google.com/site/tristanewinsfreelancewriter